Scott writes about Internet competition and threats to tech capitalism (economic regulation, property infringement, and harmful industry behavior and misrepresentation.) Cleland is President of Precursor® LLC, a Fortune 500 research consultancy focused on the future of Internet competition, privacy, security, property rights, innovation and algorithmic markets. Scott Cleland is author of the book: “Search & Destroy: Why You Can't Trust Google Inc.” www.SearchAndDestroyBook.com. Cleland also authors the widely-read www.PrecursorBlog.com; publishes www.GoogleMonitor.com; and serves as Chairman of www.NetCompetition.org, a pro-competition e-forum supported by broadband interests. Eight Congressional subcommittees have sought Cleland’s expert testimony and Institutional Investor twice ranked him the #1 independent telecom analyst in the U.S. when he was working for institutional investors. See a full bio at www.ScottCleland.com.

The Top Ten Threats to Google

#4 Android Franchise Risk from Patent/Copyright Liabilities: Google itself spotlighted this threat in blogging that there is a “hostile organized campaign” attacking Android via “bogus” patents. Google knows this is a big threat. In Steve Jobs by Walter Issacson, the late Apple CEO Steve Jobs said about Android: “I’m going to destroy Android because it’s a stolen product… They are scared to death, because they know they are guilty.” Apple has already convinced the International Trade Commission that Android has violated Apple patents and is blocking some Android imports.

Last year, Oracle sued Google for billions of dollars for “knowingly, directly and repeatedly infringed Oracle’s Java-related property.” There are incriminating Google emails that expose Google’s liability here and show that Google’s leadership knew Google was infringing. Also in 2010, Skyhook Wireless sued Google for infringing several of its WiFi location patents that enable most Android location-driven mobile applications. There are many incriminating emails in this case too. In a word, the Android platform is legally skating on extremely thin ice.

#3 Privacy Legislation Franchise Risk: Private information is the currency and users are the product that Google effectively sells to advertisers. Central to the success of Google’s ad-based model is unfettered latitude to comprehensively track and collect more private information on more people in order to provide the most “relevant” individualized advertising. The FTC’s Google Buzz settlement last March against Google for deceptively promising privacy and then reneging on that promise without notice or choice, underscores how far Google’s privacy practices differ from user expectations.

The EU is on track to require next year that non-EU companies abide by Europe’s stricter rules on data collection and user control over their private information, including a “right to be forgotten.” This creates substantial business risk for Google as Google strongly opposes segregating and storing EU information in only EU data centers and enabling EU users to remove negative information on them from search engines — on cost and philosophical grounds. Because the EU law is intended to protect EU users in whatever jurisdiction their private information resides, it could become the de facto privacy standard that Google and others must abide by.

In the U.S., privacy legislation to establish a consumer privacy bill of rights is very unlikely to pass in this congressional session, but long term it is likely to pass eventually as privacy protection is strongly bipartisan. Google’s greatest potential U.S. privacy risk would be if a Senator offered a floor amendment to require establishment of a simple Do Not Track list, modeled after the wildly popular FTC Do Not Call List. Such a simple targeted amendment that empowered users to decide for themselves if they want to be tracked online or not, would likely attract huge bipartisan support. As the only entity capable of tracking most everyone most everywhere they go on the web, a Do Not Track list would create the simplest way for U.S. users to opt out from unauthorized personalized tracking and advertising.

#2 Antitrust Franchise Risk: Currently, Google’s business practices are under antitrust investigation by the FTC, DOJ, Texas, California, New York, the European Union, and Korea. Expect the EU to charge and sanction Google first, possibly before the end of the year, because the EU’s investigation is several months ahead of the FTC’s, Google’s market share is highest in Europe, over 90%, and the EU’s law is stricter.

Google is particularly vulnerable to the FTC’s Sherman Act monopolization investigation, because unlike the DOJ, the FTC has Section 5 authority which prohibits “deceptive and unfair” practices, in addition to the FTC’s Sherman Act authority. Given Google’s many serious undisclosed conflicts of interest, it will be relatively easy for the FTC to establish consumer harm, which Google had long assumed was the strongest part of its antitrust defense. Google is also especially vulnerable because the representations Google made to the FTC to secure approval to acquire DoublClick and AdMob appear to have been at least partially untrue.

In addition to the FTC Sherman Act monopolization case, the DOJ is also very actively investigating and overseeing Google antitrust issues. Currently the DOJ is investigating the Google-Motorola acquisition with particular emphasis on whether or not Google has anti-competitive plans for Motorola’s huge patent portfolio. DOJ is also overseeing: Google’s interest in investing in Yahoo, given DOJ threatened to sue to block the proposed Google-Yahoo ad agreement three years ago; Google Books given the DOJ twice opposed the Google Book Settlement on antitrust grounds; and Google-ITA given Google is operating under a restrictive DOJ Consent Decree.

Overall Google’s antitrust risk is arguably much greater and more extensive than Microsoft’s was over a decade ago, because the Microsoft competition issues were contained in the tech industry. However, with Google, the competition issues here spider-web out to capture most all of the consumer online economy.

#1 Criminal Liability: Google’s founders’ letter promised: “Google is not a conventional company. We do not intend to become one.” A top Google lawyer admitted in Stephen Levy’s book In The Plex – that “Google’s leadership does not care terribly much about precedent or law.” The Rhode Island U.S. Attorney who led the DOJ criminal prescription drug probe of Google’s business practices said the evidence was clear current Google CEO “Larry Page knew what was going on. We know it from the investigation. We simply know it from the documents we reviewed, witnesses that we interviewed, that Larry Page knew what was going on.”

In September, Google Chairman Eric Schmidt recently testified under oath before the Senate Judiciary Subcommittee that: “I’m not sure Google is a rational business trying to maximize its own profits.” Foundem, which has filed an antitrust suit against Google, has challenged publicly the veracity of Mr. Schmidt’s testimony under oath before the Subcommittee and his written follow-up responses.

Never has there been Fortune 100 corporate leadership that, as a matter of corporate policy and business plan, built-in a systematic disregard for others’ property rights: Android patents; book, song, TV and movie copyrights; and trademarks; in order to shortchange content suppliers billions of dollars in payments under the rule of law. And never before has there been a corporation with broader ambition and capacity to rapidly enter and eventually dominate such an exceptionally wide variety of currently competitive markets.

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